We’re now on Day 4 of 7.
The worst thing for your investment track record is large losses.
For example, a 10% loss means you need a 20% rise to get back to your original amount. A 50% loss means you need 100% just to break even.
It’s almost impossible to never lose money during your time in the market. But it’s clearly in your best interest to have as few losers as possible.
To limit losses, you could use stop-loss orders. These orders sell a stock when they drop to a certain price, i.e. 50% below your purchase price. You might also only invest what you’re willing to lose.
Today, we’re going to see where small-cap gems are hiding.
So, if you want the potential to find more triple digit profit plays…keep reading.
Three ‘Rocket Stocks’ that could make you up to 726%
One stock that could turn R10,000 into more than thirty GRAND with their ‘super-powered’ waste transformation programme.
Our second pick could potentially turn R10,000 into R32,571 in this niche segment of the property market.
And you could potentially double your money on ‘Edison 2.0’, our third potentially lucrative stock.
In the early 2000s, it was almost too easy to make money.
The tide came in, as they say, and lifted all boats (stocks, property, commodities and cryptocurrencies).
But where do you find the astronomical growth today?
It’s a bit of a trick question.
You can potentially find profitable small-caps all over the market. They’re not specific to a sector or industry.
Small-caps ready to double, triple and quadruple can be found in the resource, tech, finance and a whole bunch of other sectors.
But when trying to grab a 10-bagger, it helps to look in growing markets.
How to look for exploding stocks
One example of a growth market is the fast-growing telecommunications sector.
Everyone in South Africa owns a cellphone these days, and most of them are ‘smartphones’.
And that means the demand for data and connectivity has soared.
You could invest in the likes of a Vodacom or MTN – which has already grown to mammoth proportions. But these stocks have already had massive runs. It’s unlikely they’ll run up more than 1,000% in a short space of time.
Or you could invest in the next best thing.
That’s what I told Red Hot Penny Shares readers when we invested in Poynting. The company builds mobile and mini cell base stations and other communication antennae.
And, on the back of sales from its technology the company gave my readers gains of more than 215% in less than six months!
The same could be said about Interwaste (JSE: IWE).
The company develops, builds and manages waste disposal facilities.
But, it became the first in Africa to build a waste to energy plant.
It can produce electricity by burning garbage, and the gasses it collects from garbage dumps.
In a country now faced with load-shedding, and the need to more responsibly manage our natural resources Interwaste is sitting on a potential gold mine with this technology.
Application, Potential, Growth
You’re looking for small-caps with the potential to grow earnings. How do you know earnings will grow?
Basically, what you’re looking for is application.
Does this small-cap have a product or service, which could see sales sky rocket as the company gains traction?
If yes, then you may have found yourself a great investment.
If no, then keep looking.
The beauty about investing is you don’t have to make every bet that comes your way, nor should you.
You should only invest in what you believe will be a sure winner. And by the end, hopefully you’ll have a whole bunch of them.
That’s it for Day 4.
In Day 5 we’re going to dig deeper into the business side of investing.
You probably already know there’s a business behind every stock. And it’s usually the health of that business that determines whether you should buy or move on.
That’s all coming up tomorrow. Stay tuned.
Red Hot Penny Shares